"This is the equivalent of a parking ticket -- it doesn't stop anyone from letting the meter expire next time," said Theresa Mueller, a deputy city attorney for San Francisco.

Nettie Hoge, executive director of The Utility Reform Network, believes that there may be a more nefarious side to the announcement, which was made late Tuesday.

She sees it as a likely power play between two regulators, the ISO and the PUC, which has not yet decided whether to impose sanctions.

"I think it's quite possible the ISO is trying to head off a higher sanction by the PUC . . . by coming in fast and low," Hoge said. Consumer advocates have criticized the ISO as an "old-boys network" that is stacked with utility-industry insiders.

The ISO, which is governed by the California Electricity Oversight Board, a state agency, was created last year to oversee transmission lines in the newly deregulated energy system. Previously, only the PUC had authority over utilities.

Hoge said the PUC is more consumer- friendly because it is required to deliberate in open hearings and consider public comments as it makes policy. She said the ISO's deliberations are in private.

Terry Winter, chief executive of the ISO, said the fine was not designed to influence any future action by the PUC. The purpose is to embarrass PG&E and "get their attention" by "exposing the operation," he said.

Gary Heath, executive director of the ISO oversight board, said the proposed fine was meant to "get the word out that this ISO and the state are taking the issue of liability very seriously. . . . We're putting everyone on notice that protocols will be followed, and if there's a violation, the ISO and the state will move forward in sanctioning those who violate the (rules)."

Heath said the $440,000 fine was based on the U.S. Nuclear Regulatory Commission's fee structure of $110,000 per violation. An ISO investigation found that PG&E was negligent in four areas of systems maintenance and procedures.

Asked whether the small fine would be effective as a deterrent, Heath noted that the Nuclear Regulatory Commission sanction structure is being used only as an interim baseline until the ISO develops its own.

"In the future, we could see something more robust; I don't know," Heath said. "That will be something we'll look at from the state side also -- we need sanctions that are adequate to deter future violations."

Bill Schulte, director of the PUC's consumer services division, had no comment on the ISO's action. The PUC is just finishing its investigation and "we haven't even begun to think about whether sanctions are warranted or not," he said.

Later this month, executives from the PUC and ISO will sit down with PG&E officials to discuss reforms PG&E needs to adopt to prevent future transmission problems.

The ISO's oversight board is expected to act on the sanction proposal and forward it to FERC for final approval in the next two months.

If approved, the $440,000 fine will be used to defray ISO's grid management costs, which typically are passed along to consumers. However, Bay Area homes and businesses are unlikely to see a noticeable change on their energy bills because the amount is relatively small.

PG&E spokesman Len Anderson said the company would not comment on the ISO sanction until it has been approved by the organization's governing board.

He said PG&E is undergoing an extensive review of its processes to correct the problems that led to the blackout. But, he said, the utility would be taking corrective action regardless of sanctions or other actions by regulators.